Ted Cruz

The Senate’s commerce committee Wednesday advanced legislation intended to freeze out China from the U.S. auto market, but which could also bar Mercedes-Benz from selling vehicles in America.

At the same time, lawmakers said the German automaker will probably be able to carve out an exemption, according to CNBC.

“We would never consider” banning Mercedes-Benz, Committee Chairman Sen. Ted Cruz (R-Texas) said, admitting the bill will need to be changed before becoming law.

The Connected Vehicle Security Act would bar automakers from selling vehicles using connected communications hardware and software if the companies have more than 15 per cent ownership by a foreign adversary.

The act is chiefly aimed at China, which currently exports about 8 million vehicles annually, according to the text of the act.

It would also affect North Korea, Russia and Iran.

The bill advanced out of committee by a voice vote. It still needs approval by the full Senate, as well as a similar bill in the House.

Mercedes-Benz’s largest individual shareholder is the state-owned Chinese automaker BAIC, which holds a 9.98% share.

Its second-largest individual shareholder is Chinese billionaire Li Shufu, with 9.69% of shares. Together, the two own 19.6% of Mercedes-Benz Group AG, the automaker’s parent company.

The bill, along with a similar one in the House, is driven in part by bipartisan fears among American automakers at Chinese volume and how quickly Chinese automakers are going from the initial design to mass production of vehicles.

“We’re preventing an absolute, total, and complete destruction of our industrial base,” said Sen. Bernie Moreno of Ohio, a Republican.

Moreno said Mercedes-Benz would have until 2030 to comply with the ownership limit, and could seek a waiver.

Cruz also accused General Motors, the top-selling automaker in the U.S., of supporting the provision in order to make Cadillac more competitive.

“GM is pushing for this provision to get Mercedes-Benz out of the market,” Cruz said.

Quartz is reporting that the bill has support from General Motors and the United Auto Workers. UAW President Shawn Fain said the legislation “puts common sense guardrails on a major threat to our nation’s auto industry.”

Mercedes had quietly lobbied against the bill. About 5,800 people work at the automaker’s Vance plant, which currently exports roughly 60 percent of its output.

Mercedes also has produced more than 450,000 passenger vans at a Ladson, S.C. facility since 2006.

In all, the company is responsible for 160,000 jobs in the U.S.